The Securities and Exchange Commission (SEC) has fined Inclusive Credit Lending, Inc. P1.03 million after finding the online lender charged interest rates beyond regulatory limits and used unfair debt collection practices.

Citing an order dated 21 July, the SEC's Financing and Lending Companies Department (FLCD) found Inclusive Credit administratively liable for violating SEC Memorandum Circular (MC) No. 3, which sets interest rate and fee ceilings for lending and financing companies operating online lending platforms, and MC No. 18, Series of 2019, which prohibits unfair debt collection practices.

The Commission ordered the company to pay an administrative fine of P1.03 million.

The case stemmed from a complaint filed by a borrower against Inclusive Credit's online lending platform, Pinoy Peso, alleging that the company deducted 38 percent of the principal amount from every loan before releasing the proceeds. 

The borrower also claimed she was subjected to threats, harassment and public shaming during the collection process.

The FLCD's investigation found that the platform's 38 percent upfront charge translated to a seven-day effective interest rate (EIR) of 61.29 percent, equivalent to 262.67 percent per month or 8.67 percent per day—far exceeding the maximum allowable EIR of 15 percent per month, or around 0.5 percent per day, under MC No. 3.

“The Department finds, by substantial evidence, that the questioned collection communications are sufficiently attributable to the collection of the Complainant's Pinoy Peso loan obligations,” the order read.

“The Department does not hold that a demand for payment, even one expressed firmly, is by itself unlawful. A creditor has the right to collect a valid obligation. But the right to collect is not a license to humiliate,” it added.

The regulator also found that the borrower had been subjected to collection tactics that harmed her reputation, including the posting of her identity and photograph on social media for failing to pay her loan, in violation of MC No. 18.